XL Group plc last night announced a new $1 billion share buyback programme, as it swung to a $77.5 million profit for the third quarter.

The global business insurer, which moved its domicile from the Cayman Islands to Ireland earlier this year and has substantial operations in Bermuda, said estimated catastrophe losses for the quarter were $66.2 million.

Net income attributable to ordinary shareholders was 23 cents per share, compared to a net loss of $11.4 million, or three cents per share for the same period in 2009.

Chief executive officer Mike McGavick said: "We have delivered another quarter of solid operating results in a market that continues to be challenging."

The combined ratio for property and casualty operations, which indicates an underwriting profit when under 100 percent, was 94.9 percent for the quarter, which included 6.5 points of favourable prior year development.

"This demonstrates our underwriting discipline in a challenging market," Mike McGavick added. "However, despite this solid underwriting discipline, we continue to feel the impact that the prolonged soft market has on earnings."

The company said a new $1 billion share buyback programme had been approved by its board of directors at its recent meeting, illustrating the company's "current capital strength and commitment to capital management".

XL said it had made share buybacks of $268.7 million in the third quarter, which had added 41 cents to book value per share. Since the end of the quarter of September 30, XL has purchased an additional 4.9 million ordinary shares.

"In total, 18.8 million shares were purchased at an average price of $19.95 per share for a total of $375.4 million, the full amount remaining from the previously authorised programme," the company stated.

Many insurers have spent heavily on buying back their own shares as a way of utilising excess capital during the soft market conditions.

Fully diluted book value per share grew seven percent from the prior quarter, driven by a combination of investment portfolio gains, net income and foreign currency translation gains.

Operating income was $175 million in the third quarter, or 52 cents per share, compared to $292.6 million in the same quarter last year.

XL said there had been an above average level of large property and excess casualty loss activity impacting the quarter.

Net losses relating to the New Zealand earthquake in September were estimated at $44.3 million, of the total $66.2 million in catastrophe losses for the quarter, compared to $30.8 million for the same period last year.

Fully diluted book value per ordinary share was $29.56 at September 30, 2010 as compared to $24.60 at December 31, 2009, an increase of 20.2 percent.

Net investment income for the quarter was $296.7 million compared to $327.1 million in the prior year quarter. The decline was due to lower US interest rates on the P&C portfolio and changes on foreign exchange rates on the life portfolio.

Total shareholders' equity was $10.9 billion at the end of September, an increase of three percent in the quarter and 15 percent since the end of 2009.